When I worked in venture capital, I was lucky enough to have the opportunity to invest in some really great companies during their early rounds. Now some of those companies are going public, and I find myself spending some time thinking about when to sell my stock in these companies.
I don’t think anyone has truly figured out the formula to value these companies. There just aren’t enough examples of SaaS companies that have reached maturity and shown us what they really look like in the long term. Salesforce still grows at 23% annually and trades at over 100x EBITDA!
Nonetheless, I thought it’d be an honest exercise for me to write some thoughts down and then review them in a few years.
I think that growth should be the number one factor in considering SaaS valuations (when I say valuation, I mean how much is the company worth on a revenue/gross profit/EBITDA/FCF multiple basis). If a company can grow at 50% for 3 years, it’s topline will be nearly 3.4x higher! That’s powerful.
If you’re a real SaaS company, this means you have 80+% gross margins and should start seeing nearly 40 cents/dollar of new revenue start to fall down to operating cash flows. Assuming the company that grows at 50% annually was cash flow breakeven, that means your operating cash flow in three years is more than your current revenues.
No two companies are the same. The top factors that would effect valuation are how scalable growth is (sales/marketing channels and economics), how long growth can go for (market size, competition), churn (and how it contributes to growth), and margin profile (gross and net), barriers to entry (that will protect current revenues and make sure new competition doesn’t chip into existing growth prospects)…there are some other things pretty important too, like management’s incentive system.
I think what a lot of investors have figured out is that if a company keeps growing, you can pay through the nose (relative to what most companies trade at) and still make a nice IRR. I agree that growth is the most important aspect of valuation, and that most of the other factors are basically contributors to growth. Even in these heady times of crazy valuations, I’d say that a lot of the public companies are undervalued! The other main factor here is the margin profile. If you can’t ever be profitable, then forget it. And, in the case SaaS companies, it’s more like you have to be VERY profitable.
I don’t have time to look up various rules on making stock predictions for companies you own. So, I’ll leave you with this very basic spreadsheet (SaaS valuations thoughts) that should illustrate that growth is key in valuation and how I think various companies should be valued (although I guess the numbers in blue are very much up to interpretation in most companies). Enjoy.
When I originally left a comment I seem to have clicked
on the -Notify me when new comments are added- checkbox and now
each time a comment is added I receive four emails with the same
comment. Is there an easy method you are able to remove
me from that service? Thanks a lot!
I don’t know whether it’s just me or if everybody else experiencing problems with your site.
It appears like some of the text within your posts are running off
the screen. Can somebody else please comment and let me know if this is happening to them too?
This might be a problem with my internet browser because I’ve had this happen previously.
Many thanks
I got this web page from my pal who shared with me on the topic of this web site and now this time I am visiting this web site and reading
very informative articles or reviews at this place.
I every time used to read article in news papers
but now as I am a user of net so from now I am using net for posts, thanks to
web.
I am sure this paragraph has touched all the internet viewers, its really really good post on building up new
web site.
I’m extremely inspired together with your writing skills and also with the structure to your blog.
Is that this a paid subject or did you modify it yourself? Either way stay up
the nice high quality writing, it’s rare to look a nice blog like this one today..
Da warten u.a. Saunen und einem Indoor- und Outdoorpool.
Außerdem wurde es bereits mehrfach zum besten Skigebiet der Welt gekürt!
Direkt bei den Liften des Skigebiets Obergurgl – Hochgurgl steht das Top bewertete 4°S The
Crystal mit seinem fantastischen 2.000 m² Spa-Bereich auf 2 Etagen. Die Gründe liegen klar
auf der Hand: Neben den modernsten Aufstiegsanlagen und den vielen traditionellen Hütten zum Einkehren findet ihr hier… Servus
Piraten! Lust auf einen luxuriösen Trip ganz ans Ende
des Ötztals? Dahinter stehen zwei bekannte
Persönlichkeiten, als da wären Hermann Maier & Rainer Schönfelder, welche mit dieser
neuen Hotelmarke (ursprünglicher Name adeo) Skiurlaub für jedermann erschwinglich machen, was ihnen mit ihren Hotelprojekten auf alle fälle gut… Mit fast 300 Pistenkilometern und knapp 100 Liftanlagen gehört die SkiWelt Wilder Kaiser-Brixental zu den größten und modernsten Skigebieten Österreichs und der Welt.
Auch zum diesjährigen Saisonfinale Ende März bekommt ihr noch
Termine. Falls ihr anni currentis nicht zum Rennen dort wart,
macht das nichts, denn Snowtrex hat bereits die Buchungstermine für die kommende
Zeit Jahr drin, bei denen ihr ein haufen sparen könnt.
Ahoi Piraten! Matthias Mayer heisst der diesjährige Sieger des
Hahnenkammrennens auf der Kitzbühler “Streif”.
Wem die 110 km Piste auf einer Höhe zwischen…
Thanks designed for sharing such a pleasant thinking,
piece of writing is good, thats why i have read it completely
Wow, this article is pleasant, my younger sister is analyzing such things, so
I am going to convey her.
I am genuinely thankful to the holder of this web site who has shared
this fantastic piece of writing at here.
I simply could not leave your web site prior to suggesting that I really enjoyed the usual information a person supply to your visitors?
Is gonna be back continuously in order to investigate cross-check new posts
Thank you a lot for sharing this with all people you actually
know what you are talking about! Bookmarked. Please additionally consult with
my site =). We may have a link change agreement between us
Good day! Do you use Twitter? I’d like to follow you if that would be ok.
I’m undoubtedly enjoying your blog and look forward
to new updates.
Sie haben ihren eigenen Pool. Unter Corona ist das verboten. Die Baustelle liegt auf
Eis. Den kompletten Maßnahmenkatalog des Tourismusministeriums scheint noch keiner gesehen partnerlos.
Yesim Yalcin ist Ärztin in Antalya und macht einige Tage mit ihrem
Bruder und seiner Frau hier Urlaub. Das Hotel bleibe diese Saison am besten zu.
Normalerweise wird das ende des Fastenmonats mit Familie
und Freunden gefeiert. Nicht nur Sevki Erdogan hofft, dass viele Einschränkungen Anfang Juni fallen.
Bis Mitte Juni warnt die Bundesregierung allerdings alle Deutschen, ins Ausland zu reisen. Um deutsche Urlauber trotz Corona wieder in die Türkei zu locken,
holt die Regierung in Ankara den TÜV ins Boot.
Nun sind seine Hotelzimmer alle leer, nur nicht wenige der luxuriösen Villen sind belegt.
Ein Hotelzimmer hätte sie allerdings nicht genommen. Die dürfen heutzutage allerdings ungenutzt herumliegen. Ferienhäuser werden diese Saison wohl insgesamt
mehr gefragt sein. Schwimmen und Spazieren am Meer ist verboten. Die Türkei will, dass sie
das bis zu den Sommerferien aufhebt. Der Küstenort Kas in der Türkei im
Oktober 2019 – damals war die Welt noch frei von Corona.
Bad monadisch der Zimmer begutachtet. Im kleinen Boutique-Hotel
fragen erst recht Merih Ciraks Stammgäste, wann sie diese
Saison aufmacht. Der Hotelchef kann das nicht verstehen “Es ist einige Entscheidungen, die keinen Sinn machen”,
sagt er. Ihr Vater bleibt dagegen dabei: Urlaub mit Corona mache keinen Spaß und sei gefährlich.
Sicher ist das aber nicht.
Pretty! This has been a really wonderful post. Thanks for providing this info.
Pretty great post. I just stumbled upon your weblog and wished to say that I have truly enjoyed surfing around your weblog posts.
In any case I’ll be subscribing to your feed and I’m hoping you write once more very soon!
hey there and thank you for your info – I’ve definitely
picked up something new from right here. I did however expertise a few technical points using this website,
since I experienced to reload the website many times previous to I could get it to load correctly.
I had been wondering if your hosting is OK? Not that I am complaining, but sluggish loading instances times will often affect your placement in google and could damage your high-quality
score if advertising and marketing with Adwords.
Well I’m adding this RSS to my e-mail and could look out for a lot more of your respective fascinating
content. Ensure that you update this again soon.
Have you ever thought about publishing an e-book
or guest authoring on other websites? I have a blog centered on the
same topics you discuss and would really like to have you share some stories/information. I know my visitors would enjoy your work.
If you are even remotely interested, feel free to send me an email.
I’ve been exploring for a bit for any high quality articles or weblog posts on this kind of house
. Exploring in Yahoo I finally stumbled
upon this website. Reading this info So i am glad to convey that I’ve a very excellent uncanny feeling I discovered exactly what I needed.
I most without a doubt will make sure to
don?t overlook this web site and give it a glance on a relentless
basis.
Your method of explaining everything in this post is genuinely good,
every one be able to without difficulty be aware of it, Thanks a lot.
Hello, Neat post. There is a problem along with your site
in internet explorer, may check this? IE still
is the market chief and a large portion of other
people will pass over your excellent writing because of this problem.
Woah! I’m really enjoying the template/theme of this website.
It’s simple, yet effective. A lot of times it’s very hard to get that “perfect balance” between usability and visual appeal.
I must say that you’ve done a great job with this. In addition, the blog loads super fast for me on Internet explorer.
Outstanding Blog!
Great web site. Lots of useful information here. I am sending
it to a few friends ans also sharing in delicious.
And of course, thanks for your effort!
Incredible points. Sound arguments. Keep up the good effort.
I read this post completely on the topic of the resemblance of most up-to-date and earlier technologies,
it’s amazing article.
It is the best time to make some plans for the future and it’s time to be happy.
I’ve read this post and if I could I want to suggest you few interesting things or suggestions.
Perhaps you can write next articles referring to this article.
I wish to read even more things about it!
Very good write-up. I certainly love this website.
Stick with it!
Hi there, just wanted to say, I liked this article. It was practical.
Keep on posting!
I do believe all of the ideas you have presented for your post.
They are really convincing and can certainly work. Nonetheless, the posts are
too short for novices. May just you please extend them a little
from subsequent time? Thank you for the post.
Hey there! Would you mind if I share your blog with my facebook
group? There’s a lot of folks that I think would really appreciate your content.
Please let me know. Thank you
Its like you read my mind! You seem to know so much about this, like you wrote the book in it
or something. I think that you could do with some pics to drive the message home
a little bit, but other than that, this is wonderful blog.
A fantastic read. I’ll certainly be back.
Thank you for some other informative website. Where else may just I am getting that type of info written in such an ideal approach?
I’ve a project that I’m simply now running on, and I have been at the glance out for such information.
Having read this I believed it was rather informative.
I appreciate you taking the time and effort to put this content together.
I once again find myself spending a significant amount of time both reading and commenting.
But so what, it was still worthwhile!
Das Maori Tattoo oder traditionell auch ta moko genannt, gehört zu den beliebtesten Tätowierungen schlechthin. In letzter Zeit liegen solche Tätowierungen sogar wieder ziemlich im Trend.
Sowohl Männer als auch Frauen mögen diese Art Tribal Tattoos und lassen sie sich
oft auf unterschiedlichen Körperstellen stechen. Heutzutage unterscheidet sich selbstverständlich die
Tätowierungsmethode wesentlich von der traditionellen, die in Polynesien und
Neuseeland von den einheimischen Stämmen eingesetzt wurde.
Trotzdem möchten wir an dieser Stelle schon ein paar Worte über die uralte Tradition des Maori Tattoos verlieren.
Welche sind überhaupt die Maori? So wird
eigentlich das indigene Volk Neuseelands genannt, das ursprünglich aus Polynesien kam.
Niemand kann ganz genau den Zeitpunkt nennen, als die Maori zum ersten Mal ihren Fuß auf die Küste Neuseelands gesetzt haben. Fakt ist aber, dass
dieses Volk eine intakte Kultur hatte, die reich an einzigartigen Sitten und Bräuchen war,
welche für Europäer ganz unbekannt und unverständlich waren. So ein Ritual
war nämlich das Tätowieren.
Ahaa, its good discussion on the topic of this piece
of writing at this place at this webpage, I have read
all that, so now me also commenting at this place.
I was curious if you ever thought of changing the structure of your
site? Its very well written; I love what youve got to say.
But maybe you could a little more in the way of content so people could connect with it better.
Youve got an awful lot of text for only having one or two pictures.
Maybe you could space it out better?
Hi there, this weekend is good designed for me, since
this occasion i am reading this wonderful educational
piece of writing here at my house.
I do believe all of the concepts you’ve introduced for your post.
They are very convincing and will definitely work. Nonetheless, the posts
are too quick for starters. May you please extend them a little from next
time? Thank you for the post.
Wer die Rampe nur vorübergehend benötigt oder vor der Anschaffung gern unterschiedliche Rampentypen austesten möchte, kann sich
bei verschiedenen Anbietern eine Rollstuhlrampe mieten. In Anlehnung an Typ, Material und Größe der Rollstuhlrampe können die
Preise stark variieren. Es lohnt sich, vor dem Kauf bei verschiedenen Herstellern Kostenvoranschläge einzuholen und diese dann sorgfältig zu prüfen und zu
vergleichen. Wer eine Rollstuhlrampe gebraucht kaufen möchte, sollte sicherstellen, dass
die Maße der gebrauchten Rampe zu den Gegebenheiten der eigenen Situation passen. Ein Kostenvergleich ist auch
dann sinnvoll, wenn man lediglich eine Rollstuhlrampe leihen möchte.
Angebote finden sich vielfach auf Online-Portalen für private Kleinanzeigen. Allerdings besteht auf die Rampen von privaten Verkäufern keine Garantie mehr.
Zudem ist das Risiko höher, beschädigte Ware zu erhalten. Gemäß Hersteller, Alter und Zustand
der Rampe kann das Einsparungen von bis in fünf von zehn fällen bedeuten. Die Kosten einer Rollstuhlrampe variieren im sinne Länge, Materialien und Zubehör, bspw.
einem Geländer. Kurze Rampen aus Aluminium, mit denen ein einsamer Stufe überwunden werden muss, gibt es ab circa 100 Euro auf Lager.
This website was… how do I say it? Relevant!!
Finally I’ve found something that helped me. Cheers!
I just like the helpful information you supply to your articles.
I’ll bookmark your weblog and take a look at again right here regularly.
I am somewhat certain I’ll be informed lots of new stuff right here!
Best of luck for the following!
Very good blog! Do you have any recommendations for aspiring writers?
I’m hoping to start my own blog soon but I’m a little lost on everything.
Would you advise starting with a free platform like WordPress or go for a paid option? There are so many choices out there that I’m completely confused ..
Any recommendations? Thanks!
What’s up to every one, for the reason that I am genuinely keen of reading this webpage’s post to be updated regularly.
It contains fastidious material.
At this time it seems like Drupal is the preferred blogging platform
available right now. (from what I’ve read) Is that what you are using
on your blog?
When someone writes an post he/she retains the image of a user in his/her mind that
how a user can be aware of it. Thus that’s why this article is perfect.
Thanks!
When some one searches for his essential thing, so he/she desires to be available that in detail, thus that thing is
maintained over here.
At this moment I am ready to do my breakfast, afterward having my breakfast
coming again to read additional news.
I think that is one of the such a lot significant information for me.
And i am happy reading your article. But want to commentary on some general
things, The website style is great, the articles is in point of fact great : D.
Excellent process, cheers
Hi there very cool website!! Man .. Excellent .. Wonderful ..
I will bookmark your blog and take the feeds additionally?
I’m glad to find so many helpful information right here in the put up, we need develop more strategies in this regard,
thanks for sharing. . . . . .
It’s hard to come by experienced people on this topic, but you seem like you know what you’re talking about!
Thanks